TOKYO: The Bank of Tokyo-Mitsubishi UFJ (BTMU), Japan’s largest bank, has resumed transactions with Iranian banks, including payments for Iranian crude oil bought by Japanese refiners, a company official told Platts Tuesday. BTMU’s move follows the lifting of nuclear sanctions against Iran by the US and EU on January 16.
This was followed by Japan lifting its key sanctions against Iran, including its ban on Japanese banks dealing with Iranian banks, on January 22. The additional Iranian crude comes at a time when Japanese refiners have more choices for crude, at lower prices.
According to Platts calculations, the Saudi Arabian Arab Heavy official selling price to Asia has averaged $26.64/b so far in February. That’s down from $43.41/b in September. Not only have outright crude prices fallen, but Saudi Aramco has lowered its price discounts in order to hold onto market share in Asia.
Iran has followed Saudi Arabia, and lowered its prices to Asia as well. Iran Heavy has averaged $27.84/b so far in February, down from $44.71/b in September. Iran has 48 million-50 million barrels of crude and condensate sitting in floating storage, according to Platts trade flow software cFlow.
While the bank is still rigorously complying with existing US sanctions, including a ban on any US dollar transactions, BTMU can now handle Japanese refiners’ Iranian oil payments in the Japanese yen and euros, the official said.
The restart of BTMU’s Iran oil transactions would give Japanese refiners the option to pay in the Japanese yen or euros, depending on the preferences of refiners or National Iranian Oil Company. BTMU handled most of Japan’s payments for Iranian oil prior to the sanctions in mid-2012, according to industry sources.
